Competency 5 OA Review PDF

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it +-----------------------------------------------------------------------+ | -- ----------------------------------------------- -- | | a\. maximizes tax revenue f...

The particular price that results in quantity supplied being equal to quantity demanded is the best price because it +-----------------------------------------------------------------------+ | -- ----------------------------------------------- -- | | a\. maximizes tax revenue for the government. | | -- ----------------------------------------------- -- | +=======================================================================+ | -- -------------------------------------------------------------- - | | - | | **b. maximizes the combined welfare of buyers and sellers**. | | -- -------------------------------------------------------------- - | | - | +-----------------------------------------------------------------------+ | -- ------------------------------------------ -- | | c\. minimizes the expenditure of buyers. | | -- ------------------------------------------ -- | +-----------------------------------------------------------------------+ | -- ------------------------------------ | | d\. maximizes costs of the seller. | | -- ------------------------------------ | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | Figure 7-6 | | | | A graph of price versus quantity is a supply curve, S, represented by | | a straight line ascending from a point, for convenience called, (0, P | | 0) through points (Q 1, P 1), and (Q 2, P 2). The area bounded by | | points (0, 0), (Q 2, 0), (Q 2, P 2), and (0, P 2), is transected by | | Curve S. To the left of Curve S the area is divided into two | | triangles and a rectangle. To the right of Curve S, the area is | | divided into two trapezoids. From top to bottom and left to right, | | the regions are as follow. Rectangle A, to the left of Curve S, has | | the following vertices. (0, P 2), (Q 1, P 2), (Q 1, P 1), (0, P 1). | | Triangle B, bordering Curve S to the left, has the following | | vertices. (Q 1, P 2), (Q2, P 2), (Q 1, P 1). Triangle C, bordering | | Curve S to the left, has the following vertices. (0, P 1), (Q 1, P | | 1), (0, P 0). Trapezoid D, bordering Curve S to the right, has the | | following vertices. (0, 0), (0, P 0), (Q 1, P 1), (Q 1, 0). Trapezoid | | G, bordering Curve S to the right, has the following vertices. (Q 1, | | 0), (Q 1, P 1), (Q 2, P 2), (Q 2, 0). | +=======================================================================+ |  | +-----------------------------------------------------------------------+ Refer to Figure 7-6. When the price is P2, producer surplus is +-----------------------------------------------------------------------+ | -- --------------- -- | | **a. A+B+C.** | | -- --------------- -- | +=======================================================================+ | -- -------- -- | | b\. A. | | -- -------- -- | +-----------------------------------------------------------------------+ | -- ---------- -- | | c\. A+C. | | -- ---------- -- | +-----------------------------------------------------------------------+ | +--------------------------------+--------------------------------+ | | | | d\. D+G. | | | +================================+================================+ | | | | Gross domestic product | | | | | measures | | | | | | | | | | +---------------------------+ | | | | | | -- -------------------- | | | | | | | ---- -- | | | | | | | a\. neither income n | | | | | | | or | | | | | | | expenditures. | | | | | | | | | | | | | | -- -------------------- | | | | | | | ---- -- | | | | | | | | | | | +===========================+ | | | | | | -- -------------------- | | | | | | | -- | | | | | | | b\. income but not | | | | | | | | | | | | | | expenditures. | | | | | | | | | | | | | | -- -------------------- | | | | | | | -- | | | | | | +---------------------------+ | | | | | | -- -------------------- | | | | | | | ------ -- | | | | | | | c\. expenditures but | | | | | | | not | | | | | | | income. | | | | | | | | | | | | | | -- -------------------- | | | | | | | ------ -- | | | | | | +---------------------------+ | | | | | | -- -------------------- | | | | | | | ------------- | | | | | | | **d. income and expe | | | | | | | nditures.** | | | | | | | -- -------------------- | | | | | | | ------------- | | | | | | +---------------------------+ | | | +--------------------------------+--------------------------------+ | +-----------------------------------------------------------------------+ | Figure 7-6 | | | | A graph of price versus quantity is a supply curve, S, represented by | | a straight line ascending from a point, for convenience called, (0, P | | 0) through points (Q 1, P 1), and (Q 2, P 2). The area bounded by | | points (0, 0), (Q 2, 0), (Q 2, P 2), and (0, P 2), is transected by | | Curve S. To the left of Curve S the area is divided into two | | triangles and a rectangle. To the right of Curve S, the area is | | divided into two trapezoids. From top to bottom and left to right, | | the regions are as follow. Rectangle A, to the left of Curve S, has | | the following vertices. (0, P 2), (Q 1, P 2), (Q 1, P 1), (0, P 1). | | Triangle B, bordering Curve S to the left, has the following | | vertices. (Q 1, P 2), (Q2, P 2), (Q 1, P 1). Triangle C, bordering | | Curve S to the left, has the following vertices. (0, P 1), (Q 1, P | | 1), (0, P 0). Trapezoid D, bordering Curve S to the right, has the | | following vertices. (0, 0), (0, P 0), (Q 1, P 1), (Q 1, 0). Trapezoid | | G, bordering Curve S to the right, has the following vertices. (Q 1, | | 0), (Q 1, P 1), (Q 2, P 2), (Q 2, 0). | +-----------------------------------------------------------------------+ |  | +-----------------------------------------------------------------------+ Refer to Figure 7-6. When the price falls from P2 to P1, producer surplus +-----------------------------------------------------------------------+ | -- ---------------------------------------- -- | | a\. decreases by an amount equal to C. | | -- ---------------------------------------- -- | +=======================================================================+ | -- ------------------------------------------ -- | | b\. increases by an amount equal to A+B. | | -- ------------------------------------------ -- | +-----------------------------------------------------------------------+ | -- --------------------------------------------- -- | | **c. decreases by an amount equal to A+B.** | | -- --------------------------------------------- -- | +-----------------------------------------------------------------------+ | -- ------------------------------------------ | | d\. decreases by an amount equal to A+C. | | -- ------------------------------------------ | +-----------------------------------------------------------------------+ When the demand for a good increases and the supply of the good remains unchanged, consumer surplus +-----------------------------------------------------------------------+ | -- ------------------- -- | | a\. is unchanged. | | -- ------------------- -- | +=======================================================================+ | -- ---------------- -- | | b\. decreases. | | -- ---------------- -- | +-----------------------------------------------------------------------+ | -- ---------------- -- | | c\. increases. | | -- ---------------- -- | +-----------------------------------------------------------------------+ | -- ----------------------------------------------------- | | **d. may increase, decrease, or remain unchanged.** | | -- ----------------------------------------------------- | +-----------------------------------------------------------------------+ A recession has traditionally been defined as a period during which +-----------------------------------------------------------------------+ | -- --------------------------------------------------------- -- | | a\. nominal GDP declines for four consecutive quarters. | | -- --------------------------------------------------------- -- | +=======================================================================+ | -- -------------------------------------------------------- -- | | b\. nominal GDP declines for two consecutive quarters. | | -- -------------------------------------------------------- -- | +-----------------------------------------------------------------------+ | -- -------------------------------------------------------- -- | | **c. real GDP declines for two consecutive quarters**. | | -- -------------------------------------------------------- -- | +-----------------------------------------------------------------------+ | -- ------------------------------------------------------ | | d\. real GDP declines for four consecutive quarters. | | -- ------------------------------------------------------ | +-----------------------------------------------------------------------+ Suppose Brazil has an absolute advantage over other countries in producing almonds, but other countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil +-----------------------------------------------------------------------+ | -- ---------------------------------------------------------------- | | --- -- | | a\. would have nothing to gain either from exporting or importin | | g | | almonds. | | | | -- ---------------------------------------------------------------- | | --- -- | +=======================================================================+ | -- -------------------------- -- | | b\. will export almonds. | | -- -------------------------- -- | +-----------------------------------------------------------------------+ | -- ----------------------------- -- | | **c. will import almonds**. | | -- ----------------------------- -- | +-----------------------------------------------------------------------+ | -- ---------------------------------------------------------------- | | - | | d\. will either import almonds or export almonds, but it is not | | clear from the given information. | | -- ---------------------------------------------------------------- | | - | +-----------------------------------------------------------------------+ | Figure 7-9 | | | | A graph of price, P, versus quantity, Q, shows a supply curve, S, and | | a demand curve, D. From left to right, points Q 1 and Q 2 are shown | | on the Q axis, and from bottom to top, points P 0, P 1, P 2, P 3, and | | P 4 are shown on the P axis. Curve S is a straight line ascending | | from a point for convenience called, (0, P 0), and rising through | | points (Q 1, P 1) and (Q 2, P 2). Curve D is a straight line | | descending from point (0, P 4), through points (Q 1, P 3) and (Q 2, P | | 2). The curves intersect at point (Q 2, P 2). A trapezoid is bounded | | by the following vertices. (0, P 4), (Q 2, P 2), (Q 2, 0), and (0, | | 0). The trapezoid is subdivided into four triangles, two rectangles, | | and two trapezoids. The sub regions are, from top to bottom and left | | to right, as follows. Triangle A has the following vertices. (0, P | | 4), (Q 1, P 3), (0, P 3). Rectangle B has the following vertices. (0, | | P 3), (Q 1, P 3), (Q 1, P 2), (0, P 2). Triangle C has the following | | vertices. (Q 1, P 3), (Q 2, P 2), (Q 1, P 2). Rectangle D has the | | following vertices. (0, P 2), (Q 1, P 2), (Q 1, P 1), (0, P 1). | | Triangle H has the following vertices. (Q 1, P 2), (Q 2, P 2), (Q 1, | | P 1). Triangle F has the following vertices. (0, P 1), (Q 1, P 1), | | (0, P 0). Trapezoid G has the following vertices. (0, P 0), (Q 1, P | | 1), (Q 1, 0), (0, 0). Trapezoid I has the following vertices. (Q 1, P | | 1), (Q 2, P 2), (Q 2, 0), (Q1, 0). | +-----------------------------------------------------------------------+ |  | +-----------------------------------------------------------------------+ Refer to Figure 7-9. At equilibrium, consumer surplus is represented by the area +-----------------------------------------------------------------------+ | -- -------- -- | | a\. A. | | -- -------- -- | +=======================================================================+ | -- ------------------ -- | | b\. A+B+C+D+H+F. | | -- ------------------ -- | +-----------------------------------------------------------------------+ | -- ------------ -- | | c\. D+H+F. | | -- ------------ -- | +-----------------------------------------------------------------------+ | -- --------------- | | **d. A+B+C.** | | -- --------------- | +-----------------------------------------------------------------------+ Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in +-----------------------------------------------------------------------+ | -- ------------------------------------ -- | | a\. both Mexican GDP and U.S. GDP. | | -- ------------------------------------ -- | +=======================================================================+ | -- --------------------------------------------------------- -- | | **b. Mexican GDP, but it is not included in U.S. GDP.** | | -- --------------------------------------------------------- -- | +-----------------------------------------------------------------------+ | -- ------------------------------------------------------ -- | | c\. U.S. GDP, but it is not included in Mexican GDP. | | -- ------------------------------------------------------ -- | +-----------------------------------------------------------------------+ | -- --------------------------------------- | | d\. neither Mexican GDP nor U.S. GDP. | | -- --------------------------------------- | +-----------------------------------------------------------------------+ | Figure 7-9 | | | | A graph of price, P, versus quantity, Q, shows a supply curve, S, and | | a demand curve, D. From left to right, points Q 1 and Q 2 are shown | | on the Q axis, and from bottom to top, points P 0, P 1, P 2, P 3, and | | P 4 are shown on the P axis. Curve S is a straight line ascending | | from a point for convenience called, (0, P 0), and rising through | | points (Q 1, P 1) and (Q 2, P 2). Curve D is a straight line | | descending from point (0, P 4), through points (Q 1, P 3) and (Q 2, P | | 2). The curves intersect at point (Q 2, P 2). A trapezoid is bounded | | by the following vertices. (0, P 4), (Q 2, P 2), (Q 2, 0), and (0, | | 0). The trapezoid is subdivided into four triangles, two rectangles, | | and two trapezoids. The sub regions are, from top to bottom and left | | to right, as follows. Triangle A has the following vertices. (0, P | | 4), (Q 1, P 3), (0, P 3). Rectangle B has the following vertices. (0, | | P 3), (Q 1, P 3), (Q 1, P 2), (0, P 2). Triangle C has the following | | vertices. (Q 1, P 3), (Q 2, P 2), (Q 1, P 2). Rectangle D has the | | following vertices. (0, P 2), (Q 1, P 2), (Q 1, P 1), (0, P 1). | | Triangle H has the following vertices. (Q 1, P 2), (Q 2, P 2), (Q 1, | | P 1). Triangle F has the following vertices. (0, P 1), (Q 1, P 1), | | (0, P 0). Trapezoid G has the following vertices. (0, P 0), (Q 1, P | | 1), (Q 1, 0), (0, 0). Trapezoid I has the following vertices. (Q 1, P | | 1), (Q 2, P 2), (Q 2, 0), (Q1, 0). | +-----------------------------------------------------------------------+ |  | +-----------------------------------------------------------------------+ Refer to Figure 7-9. At equilibrium, total surplus is represented by the area +-----------------------------------------------------------------------+ | -- -------------- -- | | a\. A+B+D+F. | | -- -------------- -- | +=======================================================================+ | -- ------------ -- | | b\. A+B+C. | | -- ------------ -- | +-----------------------------------------------------------------------+ | -- ---------------------- -- | | c\. A+B+C+D+H+F+G+I. | | -- ---------------------- -- | +-----------------------------------------------------------------------+ | -- --------------------- -- | | **d. A+B+C+D+H+F.** | | -- --------------------- -- | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | Figure 7-9 | | | | A graph of price, P, versus quantity, Q, shows a supply curve, S, and | | a demand curve, D. From left to right, points Q 1 and Q 2 are shown | | on the Q axis, and from bottom to top, points P 0, P 1, P 2, P 3, and | | P 4 are shown on the P axis. Curve S is a straight line ascending | | from a point for convenience called, (0, P 0), and rising through | | points (Q 1, P 1) and (Q 2, P 2). Curve D is a straight line | | descending from point (0, P 4), through points (Q 1, P 3) and (Q 2, P | | 2). The curves intersect at point (Q 2, P 2). A trapezoid is bounded | | by the following vertices. (0, P 4), (Q 2, P 2), (Q 2, 0), and (0, | | 0). The trapezoid is subdivided into four triangles, two rectangles, | | and two trapezoids. The sub regions are, from top to bottom and left | | to right, as follows. Triangle A has the following vertices. (0, P | | 4), (Q 1, P 3), (0, P 3). Rectangle B has the following vertices. (0, | | P 3), (Q 1, P 3), (Q 1, P 2), (0, P 2). Triangle C has the following | | vertices. (Q 1, P 3), (Q 2, P 2), (Q 1, P 2). Rectangle D has the | | following vertices. (0, P 2), (Q 1, P 2), (Q 1, P 1), (0, P 1). | | Triangle H has the following vertices. (Q 1, P 2), (Q 2, P 2), (Q 1, | | P 1). Triangle F has the following vertices. (0, P 1), (Q 1, P 1), | | (0, P 0). Trapezoid G has the following vertices. (0, P 0), (Q 1, P | | 1), (Q 1, 0), (0, 0). Trapezoid I has the following vertices. (Q 1, P | | 1), (Q 2, P 2), (Q 2, 0), (Q1, 0). | +=======================================================================+ |  | +-----------------------------------------------------------------------+ Refer to Figure 7-9. If the price were P3, consumer surplus would be represented by the area +-----------------------------------------------------------------------+ | -- ------------------ -- | | a\. A+B+C+D+H+F. | | -- ------------------ -- | +=======================================================================+ | -- ------------ -- | | b\. D+H+F. | | -- ------------ -- | +-----------------------------------------------------------------------+ | -- ------------ -- | | c\. A+B+C. | | -- ------------ -- | +-----------------------------------------------------------------------+ | **d. A.** | | -- ----------- -- | | | +-----------------------------------------------------------------------+ | Figure 7-8 | | | | A graph of price, P, versus quantity, Q, shows a supply curve, S, | | rising linearly from the origin, designated as Point L, through Point | | N = (M, K), and a demand curve, D, descending linearly from point (0, | | J) to point (R, 0). The curves intersect at point (M, K). | +-----------------------------------------------------------------------+ |  | +-----------------------------------------------------------------------+ Refer to Figure 7-8. Total surplus can be measured as the area +-----------------------------------------------------------------------+ | -- ---------- -- | | a\. JRL. | | -- ---------- -- | +=======================================================================+ | -- ------------- -- | | **b. JNL.** | | -- ------------- -- | +-----------------------------------------------------------------------+ | -- ---------- -- | | c\. JNK. | | -- ---------- -- | +-----------------------------------------------------------------------+ | -- ---------- | | d\. JNML | | -- ---------- | +-----------------------------------------------------------------------+ If the price a consumer pays for a product is equal to a consumer\'s willingness to pay, then the consumer surplus relevant to that purchase is +-----------------------------------------------------------------------+ | -- ------------------------------------------------------------ -- | | a\. positive, and the consumer would purchase the product. | | -- ------------------------------------------------------------ -- | +=======================================================================+ | -- -------------- -- | | **b. zero.** | | -- -------------- -- | +-----------------------------------------------------------------------+ | -- ---------------------------------------------------------------- | | -- | | c\. negative, and the consumer would not purchase the product. | | | | -- ---------------------------------------------------------------- | | -- | +-----------------------------------------------------------------------+ | -- ---------------------------------------------------------------- | | ---- | | d\. There is not enough information given to answer this questio | | n. | | -- ---------------------------------------------------------------- | | ---- | +-----------------------------------------------------------------------+ When the nation of Duxembourg allows trade and becomes an importer of software, +-----------------------------------------------------------------------+ | -- ---------------------------------------------------------------- | | ----- -- | | a\. residents of Duxembourg who produce software become worse of | | f; | | residents of Duxembourg who buy software become better off; and | | the | | economic well-being of Duxembourg falls. | | | | -- ---------------------------------------------------------------- | | ----- -- | +=======================================================================+ | -- ---------------------------------------------------------------- | | ----- -- | | b\. residents of Duxembourg who produce software become better o | | ff; | | residents of Duxembourg who buy software become worse off; and t | | he | | economic well-being of Duxembourg falls. | | | | -- ---------------------------------------------------------------- | | ----- -- | +-----------------------------------------------------------------------+ | -- ---------------------------------------------------------------- | | --------------------------------------------------------------------- | | ----------------------------------------------- -- | | **c. residents of Duxembourg who produce software become worse o | | ff; residents of Duxembourg who buy software become better off; and t | | he economic well-being of Duxembourg rises.** | | -- ---------------------------------------------------------------- | | --------------------------------------------------------------------- | | ----------------------------------------------- -- | +-----------------------------------------------------------------------+ | +--------------------------------+--------------------------------+ | | | | d\. residents of Duxembourg | | | | | who produce software become | | | | | better off; residents of | | | | | Duxembourg who buy software | | | | | become worse off; and the | | | | | economic well-being of | | | | | Duxembourg rises. | | | | | | | | | | A supply curve can be used to | | | | | measure producer surplus | | | | | because it reflects | | | | | | | | | | +---------------------------+ | | | | | | -- -------------------- | | | | | | | ------ -- | | | | | | | a\. the amount that | | | | | | | will | | | | | | | be purchased by | | | | | | | | | | | | | | consumers in the | | | | | | | | | | | | | | market. | | | | | | | | | | | | | | -- -------------------- | | | | | | | ------ -- | | | | | | | | | | | +===========================+ | | | | | | -- -------------------- | | | | | | | -- | | | | | | | b\. the actions of | | | | | | | | | | | | | | sellers. | | | | | | | | | | | | | | -- -------------------- | | | | | | | -- | | | | | | +---------------------------+ | | | | | | -- -------------------- | | | | | | | ----- -- | | | | | | | **c. sellers\' costs | | | | | | | **. | | | | | | | -- -------------------- | | | | | | | ----- -- | | | | | | +---------------------------+ | | | | | | -- -------------------- | | | | | | | --- | | | | | | | d\. quantity supplie | | | | | | | d | | | | | | | -- -------------------- | | | | | | | --- | | | | | | +---------------------------+ | | | | | | | | | | Which of the following is | | | | | included in the calculation of | | | | | GDP? | | | | | | | | | | +---------------------------+ | | | | | | -- -------------------- | | | | | | | ------------------------- | | | | | | | ------------------------- | | | | | | | ------------------------- | | | | | | | ------------------------- | | | | | | | --------- -- | | | | | | | **a. The purchase of | | | | | | | tutoring services from a | | | | | | | tutor who holds citizens | | | | | | | hip outside the country b | | | | | | | ut resides within the cou | | | | | | | ntry.** | | | | | | | -- -------------------- | | | | | | | ------------------------- | | | | | | | ------------------------- | | | | | | | ------------------------- | | | | | | | ------------------------- | | | | | | | --------- -- | | | | | | | | | | | +===========================+ | | | | | | -- -------------------- | | | | | | | --- -- | | | | | | | b\. The purchase of | | | | | | | a | | | | | | | used textbook from a | | | | | | | | | | | | | | friend who took the | | | | | | | | | | | | | | same class last year | | | | | | |. | | | | | | | -- -------------------- | | | | | | | --- -- | | | | | | +---------------------------+ | | | | | | -- -------------------- | | | | | | | --- -- | | | | | | | c\. The purchase of | | | | | | | a | | | | | | | new edition of a | | | | | | | | | | | | | | foreign textbook tha | | | | | | | t | | | | | | | was produced in a | | | | | | | | | | | | | | different nation. | | | | | | | | | | | | | | -- -------------------- | | | | | | | --- -- | | | | | | +---------------------------+ | | | | | | +----------+----------+ | | | | | | | | | d\. The | | | | | | | | | | purchase | | | | | | | | | | of ink | | | | | | | | | | and | | | | | | | | | | paper | | | | | | | | | | supplies | | | | | | | | | | by a | | | | | | | | | | textbook | | | | | | | | | | company | | | | | | | | | | for | | | | | | | | | | the | | | | | | | | | | producti | | | | | | | | | | on | | | | | | | | | | of new | | | | | | | | | | textbook | | | | | | | | | | s. | | | | | | | | | | | | | | | | | | | | In the | | | | | | | | | | actual | | | | | | | | | | economy, | | | | | | | | | | goods | | | | | | | | | | and | | | | | | | | | | services | | | | | | | | | | are | | | | | | | | | | purchase | | | | | | | | | | d | | | | | | | | | | by | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | a. h | | | | | | | | | | ousehold | | | | | | | | | | s and th | | | | | | | | | | e govern | | | | | | | | | | ment, bu | | | | | | | | | | t not fi | | | | | | | | | | rms. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | b. h | | | | | | | | | | ousehold | | | | | | | | | | s and fi | | | | | | | | | | rms, but | | | | | | | | | | not the | | | | | | | | | | governm | | | | | | | | | | ent. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | c. h | | | | | | | | | | ousehold | | | | | | | | | | s, firms | | | | | | | | | | , and th | | | | | | | | | | e govern | | | | | | | | | | ment. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | d. h | | | | | | | | | | ousehold | | | | | | | | | | s, but n | | | | | | | | | | ot firms | | | | | | | | | | or the | | | | | | | | | | governme | | | | | | | | | | nt. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | T | | | | | | | | | | he term | | | | | | | | | | economis | | | | | | | | | | ts use t | | | | | | | | | | o descri | | | | | | | | | | be a sit | | | | | | | | | | uation i | | | | | | | | | | n which | | | | | | | | | | the econ | | | | | | | | | | omy's ov | | | | | | | | | | erall pr | | | | | | | | | | ice leve | | | | | | | | | | l is ris | | | | | | | | | | ing is | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | a. r | | | | | | | | | | ecession | | | | | | | | | |. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | b. g | | | | | | | | | | rowth. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | c. e | | | | | | | | | | xpansion | | | | | | | | | |. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | < | | | | | | | | | | strong>d | | | | | | | | | |. inflat | | | | | | | | | | ion. | | | | | | | | | | Assum | | | | | | | | | | e, for V | | | | | | | | | | ietnam, | | | | | | | | | | that the | | | | | | | | | | domesti | | | | | | | | | | c price | | | | | | | | | | of texti | | | | | | | | | | les with | | | | | | | | | | out inte | | | | | | | | | | rnationa | | | | | | | | | | l trade | | | | | | | | | | is highe | | | | | | | | | | r than t | | | | | | | | | | he world | | | | | | | | | | price o | | | | | | | | | | f textil | | | | | | | | | | es. This | | | | | | | | | | suggest | | | | | | | | | | s that, | | | | | | | | | | in the p | | | | | | | | | | roductio | | | | | | | | | | n of tex | | | | | | | | | | tiles, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | a. o | | | | | | | | | | ther cou | | | | | | | | | | ntries h | | | | | | | | | | ave a co | | | | | | | | | | mparativ | | | | | | | | | | e advant | | | | | | | | | | age over | | | | | | | | | | Vietnam | | | | | | | | | | and Vie | | | | | | | | | | tnam wil | | | | | | | | | | l export | | | | | | | | | | textile | | | | | | | | | | s. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | b. V | | | | | | | | | | ietnam h | | | | | | | | | | as a com | | | | | | | | | | parative | | | | | | | | | | advanta | | | | | | | | | | ge over | | | | | | | | | | other co | | | | | | | | | | untries | | | | | | | | | | and Viet | | | | | | | | | | nam will | | | | | | | | | | export | | | | | | | | | | textiles | | | | | | | | | |. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | c. V | | | | | | | | | | ietnam h | | | | | | | | | | as a com | | | | | | | | | | parative | | | | | | | | | | advanta | | | | | | | | | | ge over | | | | | | | | | | other co | | | | | | | | | | untries | | | | | | | | | | and Viet | | | | | | | | | | nam will | | | | | | | | | | import | | | | | | | | | | textiles | | | | | | | | | |. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | < | | | | | | | | | | strong>d | | | | | | | | | |. other | | | | | | | | | | countrie | | | | | | | | | | s have a | | | | | | | | | | compara | | | | | | | | | | tive adv | | | | | | | | | | antage o | | | | | | | | | | ver Viet | | | | | | | | | | nam and | | | | | | | | | | Vietnam | | | | | | | | | | will imp | | | | | | | | | | ort text | | | | | | | | | | iles. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | F | | | | | | | | | | igure 7- | | | | | | | | | | 9 | | | | | | | | | | A gra | | | | | | | | | | ph of pr | | | | | | | | | | ice, P, | | | | | | | | | | versus q | | | | | | | | | | uantity, | | | | | | | | | | Q, show | | | | | | | | | | s a supp | | | | | | | | | | ly curve | | | | | | | | | | , S, and | | | | | | | | | | a deman | | | | | | | | | | d curve, | | | | | | | | | | D. From | | | | | | | | | | left to | | | | | | | | | | right, | | | | | | | | | | points Q | | | | | | | | | | 1 and Q | | | | | | | | | | 2 are s | | | | | | | | | | hown on | | | | | | | | | | the Q ax | | | | | | | | | | is, and | | | | | | | | | | from bot | | | | | | | | | | tom to t | | | | | | | | | | op, poin | | | | | | | | | | ts P 0, | | | | | | | | | | P 1, P 2 | | | | | | | | | | , P 3, a | | | | | | | | | | nd P 4 a | | | | | | | | | | re shown | | | | | | | | | | on the | | | | | | | | | | P axis. | | | | | | | | | | Curve S | | | | | | | | | | is a str | | | | | | | | | | aight li | | | | | | | | | | ne ascen | | | | | | | | | | ding fro | | | | | | | | | | m a poin | | | | | | | | | | t for co | | | | | | | | | | nvenienc | | | | | | | | | | e called | | | | | | | | | | , (0, P | | | | | | | | | | 0), and | | | | | | | | | | rising t | | | | | | | | | | hrough p | | | | | | | | | | oints (Q | | | | | | | | | | 1, P 1) | | | | | | | | | | and (Q | | | | | | | | | | 2, P 2). | | | | | | | | | | Curve D | | | | | | | | | | is a st | | | | | | | | | | raight l | | | | | | | | | | ine desc | | | | | | | | | | ending f | | | | | | | | | | rom poin | | | | | | | | | | t (0, P | | | | | | | | | | 4), thro | | | | | | | | | | ugh poin | | | | | | | | | | ts (Q 1, | | | | | | | | | | P 3) an | | | | | | | | | | d (Q 2, | | | | | | | | | | P 2). Th | | | | | | | | | | e curves | | | | | | | | | | interse | | | | | | | | | | ct at po | | | | | | | | | | int (Q 2 | | | | | | | | | | , P 2). | | | | | | | | | | A trapez | | | | | | | | | | oid is b | | | | | | | | | | ounded b | | | | | | | | | | y the fo | | | | | | | | | | llowing | | | | | | | | | | vertices | | | | | | | | | |. (0, P | | | | | | | | | | 4), (Q 2 | | | | | | | | | | , P 2), | | | | | | | | | | (Q 2, 0) | | | | | | | | | | , and (0 | | | | | | | | | | , 0). Th | | | | | | | | | | e trapez | | | | | | | | | | oid is s | | | | | | | | | | ubdivide | | | | | | | | | | d into f | | | | | | | | | | our tria | | | | | | | | | | ngles, t | | | | | | | | | | wo recta | | | | | | | | | | ngles, a | | | | | | | | | | nd two t | | | | | | | | | | rapezoid | | | | | | | | | | s. The s | | | | | | | | | | ub regio | | | | | | | | | | ns are, | | | | | | | | | | from top | | | | | | | | | | to bott | | | | | | | | | | om and l | | | | | | | | | | eft to r | | | | | | | | | | ight, as | | | | | | | | | | follows | | | | | | | | | |. Triang | | | | | | | | | | le A has | | | | | | | | | | the fol | | | | | | | | | | lowing v | | | | | | | | | | ertices. | | | | | | | | | | (0, P 4 | | | | | | | | | | ), (Q 1, | | | | | | | | | | P 3), ( | | | | | | | | | | 0, P 3). | | | | | | | | | | Rectang | | | | | | | | | | le B has | | | | | | | | | | the fol | | | | | | | | | | lowing v | | | | | | | | | | ertices. | | | | | | | | | | (0, P 3 | | | | | | | | | | ), (Q 1, | | | | | | | | | | P 3), ( | | | | | | | | | | Q 1, P 2 | | | | | | | | | | ), (0, P | | | | | | | | | | 2). Tri | | | | | | | | | | angle C | | | | | | | | | | has the | | | | | | | | | | followin | | | | | | | | | | g vertic | | | | | | | | | | es. (Q 1 | | | | | | | | | | , P 3), | | | | | | | | | | (Q 2, P | | | | | | | | | | 2), (Q 1 | | | | | | | | | | , P 2). | | | | | | | | | | Rectangl | | | | | | | | | | e D has | | | | | | | | | | the foll | | | | | | | | | | owing ve | | | | | | | | | | rtices. | | | | | | | | | | (0, P 2) | | | | | | | | | | , (Q 1, | | | | | | | | | | P 2), (Q | | | | | | | | | | 1, P 1) | | | | | | | | | | , (0, P | | | | | | | | | | 1). Tria | | | | | | | | | | ngle H h | | | | | | | | | | as the f | | | | | | | | | | ollowing | | | | | | | | | | vertice | | | | | | | | | | s. (Q 1, | | | | | | | | | | P 2), ( | | | | | | | | | | Q 2, P 2 | | | | | | | | | | ), (Q 1, | | | | | | | | | | P 1). T | | | | | | | | | | riangle | | | | | | | | | | F has th | | | | | | | | | | e follow | | | | | | | | | | ing vert | | | | | | | | | | ices. (0 | | | | | | | | | | , P 1), | | | | | | | | | | (Q 1, P | | | | | | | | | | 1), (0, | | | | | | | | | | P 0). Tr | | | | | | | | | | apezoid | | | | | | | | | | G has th | | | | | | | | | | e follow | | | | | | | | | | ing vert | | | | | | | | | | ices. (0 | | | | | | | | | | , P 0), | | | | | | | | | | (Q 1, P | | | | | | | | | | 1), (Q 1 | | | | | | | | | | , 0), (0 | | | | | | | | | | , 0). Tr | | | | | | | | | | apezoid | | | | | | | | | | I has th | | | | | | | | | | e follow | | | | | | | | | | ing vert | | | | | | | | | | ices. (Q | | | | | | | | | | 1, P 1) | | | | | | | | | | , (Q 2, | | | | | | | | | | P 2), (Q | | | | | | | | | | 2, 0), | | | | | | | | | | (Q1, 0). | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Refer | | | | | | | | | | to Figu | | | | | | | | | | re 7-9. | | | | | | | | | | At equil | | | | | | | | | | ibrium, | | | | | | | | | | producer | | | | | | | | | | surplus | | | | | | | | | | is repr | | | | | | | | | | esented | | | | | | | | | | by the a | | | | | | | | | | rea | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | a. F | | | | | | | | | |. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | b. D | | | | | | | | | | +H+F. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | c. F | | | | | | | | | | +G. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | d. D | | | | | | | | | | +H+F+G+I | | | | | | | | | |. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | I | | | | | | | | | | n order | | | | | | | | | | to inclu | | | | | | | | | | de many | | | | | | | | | | differen | | | | | | | | | | t goods | | | | | | | | | | and serv | | | | | | | | | | ices in | | | | | | | | | | an aggre | | | | | | | | | | gate mea | | | | | | | | | | sure, GD | | | | | | | | | | P is com | | | | | | | | | | puted us | | | | | | | | | | ing, pri | | | | | | | | | | marily,< | | | | | | | | | | /p> | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | a. m | | | | | | | | | | arket pr | | | | | | | | | | ices. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | b. q | | | | | | | | | | uantitie | | | | | | | | | | s purcha | | | | | | | | | | sed by a | | | | | | | | | | typical | | | | | | | | | | urban h | | | | | | | | | | ousehold | | | | | | | | | |. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | c. p | | | | | | | | | | rofits f | | | | | | | | | | rom prod | | | | | | | | | | ucing go | | | | | | | | | | ods and | | | | | | | | | | services | | | | | | | | | |. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | d. v | | | | | | | | | | alues of | | | | | | | | | | goods a | | | | | | | | | | nd servi | | | | | | | | | | ces base | | | | | | | | | | d on sur | | | | | | | | | | veys of | | | | | | | | | | consumer | | | | | | | | | | s. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | W | | | | | | | | | | hat is t | | | | | | | | | | he funda | | | | | | | | | | mental b | | | | | | | | | | asis for | | | | | | | | | | trade a | | | | | | | | | | mong nat | | | | | | | | | | ions? | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | a. M | | | | | | | | | | isguided | | | | | | | | | | economi | | | | | | | | | | c polici | | | | | | | | | | es | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | b. C | | | | | | | | | | omparati | | | | | | | | | | ve advan | | | | | | | | | | tage | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | c. A | | | | | | | | | | bsolute | | | | | | | | | | advantag | | | | | | | | | | e | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | d. S | | | | | | | | | | hortages | | | | | | | | | | or surp | | | | | | | | | | luses in | | | | | | | | | | nations | | | | | | | | | | that do | | | | | | | | | | not tra | | | | | | | | | | de | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | F | | | | | | | | | | igure 7- | | | | | | | | | | 9 | | | | | | | | | | A gra | | | | | | | | | | ph of pr | | | | | | | | | | ice, P, | | | | | | | | | | versus q | | | | | | | | | | uantity, | | | | | | | | | | Q, show | | | | | | | | | | s a supp | | | | | | | | | | ly curve | | | | | | | | | | , S, and | | | | | | | | | | a deman | | | | | | | | | | d curve, | | | | | | | | | | D. From | | | | | | | | | | left to | | | | | | | | | | right, | | | | | | | | | | points Q | | | | | | | | | | 1 and Q | | | | | | | | | | 2 are s | | | | | | | | | | hown on | | | | | | | | | | the Q ax | | | | | | | | | | is, and | | | | | | | | | | from bot | | | | | | | | | | tom to t | | | | | | | | | | op, poin | | | | | | | | | | ts P 0, | | | | | | | | | | P 1, P 2 | | | | | | | | | | , P 3, a | | | | | | | | | | nd P 4 a | | | | | | | | | | re shown | | | | | | | | | | on the | | | | | | | | | | P axis. | | | | | | | | | | Curve S | | | | | | | | | | is a str | | | | | | | | | | aight li | | | | | | | | | | ne ascen | | | | | | | | | | ding fro | | | | | | | | | | m a poin | | | | | | | | | | t for co | | | | | | | | | | nvenienc | | | | | | | | | | e called | | | | | | | | | | , (0, P | | | | | | | | | | 0), and | | | | | | | | | | rising t | | | | | | | | | | hrough p | | | | | | | | | | oints (Q | | | | | | | | | | 1, P 1) | | | | | | | | | | and (Q | | | | | | | | | | 2, P 2). | | | | | | | | | | Curve D | | | | | | | | | | is a st | | | | | | | | | | raight l | | | | | | | | | | ine de